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BUDGET AND FISCAL PLAN — 2002/03 to 2004/05

 

Chapter 3: REVISED FINANCIAL FORECAST (THIRD QUARTERLY REPORT)

 

Table 3.1: Revised Forecast (Unaudited)  

Despite recent developments concerning the physicians' interim arbitration award, the overall fiscal forecast for 2001/02 has remained on track with the second Quarterly Report forecast. At $1,964 million, the deficit forecast is now projected to be $464 million higher than the July 30 Update and includes a $70-million forecast allowance for unforeseen developments over the rest of the year. Excluding the $1,464 million one-time pension benefit, the deficit forecast for 2001/02 is $3,428 million.

A number of developments have occurred since the second Quarterly Report in November.

Taking into account the third quarter forecast revisions, revenue for the full year is now projected to be $47 million below the July Update (see Table 3.7). Despite significantly lower revenue from natural resources, primarily due to weak energy prices, most of this decline is offset by higher-than-expected income tax revenue.

Overall government spending is now projected to be $468 million above the July 30 Update (see Table 3.8). Excluding costs related to Skeena Cellulose Inc. and the recent physicians' interim arbitration award, spending for the year would have been $102 million below budget due to lower forest fire-fighting costs, debt interest costs and other savings.

In total, Crown corporation and agency net losses are projected to be $505 million higher than the July 30 Update forecast mainly due to lower net income of BC Hydro and higher costs in ICBC, BC Rail and Forest Renewal BC (see Table 3.9).

The following table provides details on developments since the second Quarterly Report.


Table 3.2: Developments Since the Second Quarterly Report -- Summary Accounts  

Revenue

The revenue forecast is $205 million higher than the second Quarterly Report. Significant changes include:

Further details on the full year forecast are shown in Table 3.7 and key assumptions are provided in Appendix Table A9.

Expenditure

The spending forecast increased $524 million from the second Quarterly Report. Significant changes include:

The July 30 Update identified additional spending pressures totalling $544 million that would need to be managed by ministries over the year. The largest pressure, estimated at $400 million, was identified for the Ministry of Health Services. Excluding recent developments concerning the physicians' interim arbitration award, ministry pressures have been managed since the July 30 Update, in part through ministry actions and in part through funding from the contingencies vote.

To date, spending commitments totalling $302 million have been allocated to the contingencies vote. Table 3.3 shows that $58 million remains available to offset pressures over the rest of the year.


Table 3.3: Consolidated Revenue Fund - 2001/02 - Pressures Allocated to the Contingencies Vote  

Further details on the spending forecasts are shown in Table 3.8 and assumptions are provided in Appendix Table A10.

Crown Corporations and Agencies

Crown corporation and agency net losses (after adjustments) are projected to be $164 million higher than forecast in the second Quarterly Report. Significant changes include:

Further details on the Crown corporation forecasts are shown in Table 3.9 and assumptions are provided in Appendix Table A11.

Capital Spending and Provincial Debt

 


Table 3.4: Capital Expenditures and Provincial Debt - Revised Forecast  

Since the second Quarterly Report, the capital spending forecast has been lowered $160 million to total $2.5 billion. Significant changes are shown in Table 3.5.

In total, capital spending for the year is $410 million below the July 30 Update mainly due to lower spending for health facilities, ministry minor capital purchases, SkyTrain, BC Hydro and ICBC.

Further details on capital spending are shown in Table 3.10. Information on revised forecasts for major capital projects (those with multi-year budgets totalling $50 million or more) is provided in Table 3.11.

Provincial debt is forecast to total $36.4 billion at year-end. The forecast is $821 million lower than the second Quarterly Report due to the removal of the debt forecast allowance, lower borrowing for government operating purposes and reduced capital spending for transportation capital projects. The expected warehouse program balance of $1.1 billion means that a debt forecast allowance to year-end is unnecessary. Significant changes are shown in Table 3.5.

In total, provincial debt will be $393 million below the July 30 Update. Significantly reduced borrowing requirements for government operating purposes and capital spending are partially offset by increased borrowing for commercial Crown corporations and the warehouse program.

Further information on the debt forecast is shown in Table 3.12.


Table 3.5: Developments Since the Second Quarterly Report - Capital and Debt  

Table 3.6: Summary Accounts - Revised Forecast (Unaudited)  

Table 3.7: Consolidated Revenue Fund Revenue by Source (Unaudited)  

Table 3.8: Consolidated Revenue Fund Expenditure by Ministry (Unaudited)  

Table 3.9: Crown Corporation and Agency Results (Unaudited)  

Table 3.10: Government, Crown Corporations and Agencies - Capital Expenditures  

Table 3.11: Capital Expenditure Projects Greater than $50 Million  

Table 3.12: Provincial Debt Outstanding (Unaudited)  

Table 3.13: Summary Accounts Balance Sheet (Unaudited)  

 

BUDGET AND FISCAL PLAN — 2002/03 to 2004/05

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